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Technical analyst Prakash Gaba believes that the markets are overstretched in the short term while the long-term trend is still intact.
Gaba further adds that this is the ideal situation to hold short positions in the market.
He further states that there could be a cool-off of around 100-150 points on the Nifty.
Excerpts from CNBC-TV18's exclusive interview with Prakash Gaba:
How would you approach the market now as a technical trader because it has been quite sideways this past week or so?
Personally, I feel that the market is over stretched in the short-term time frame, the long term trend is still intact. We have seen a high of 12671 and then we saw a low of 8800 levels, and then yesterday's high or 11795.
Structurally, this tells me that the place for reaction is just right. Even if it does go up, maybe about 15-20 points on the Sensex, it doesn't bother. The place for a reaction is just right if the market has to come down and cool off a bit. This place is a beautiful place to short in the short term.
On the Nifty front, maybe around 150-170 points is a possibility and one can see some kind of a cool off here.
Couple of those largecaps held the index up yesterday, stocks like ITC, TCS and even RPL. How do those charts look to you?
I think I like ITC best. ITC still has some more upside, maybe around Rs 195-200 levels is a possibility, the structure is positive, good volumes, good breakout. So ITC seems to be fair on the long side, even RPL looks good. The way it has consolidated over the lower levels around Rs 60 levels; I think maybe Rs 69-Rs 70 is a possibility in RPL. I think ITC and RPL look good.
Have you taken a look at some of these midcap banking stocks ING- Vysya, Bank of Baroda and maybe even a Vijaya Bank?
I like all of them. Bank of Baroda is looking good, it has been in an upmove, a fresh upmove is there maybe around Rs 260-Rs 265 level is a possibility. Vijaya Bank is also looking up, maybe around Rs 50-Rs 51 level is a possibility. ING Vysya Bank has a very strong support around Rs 130, I think we can still get around Rs 20
Flat opening, as a short-term trader how do you position yourself on the long side or short side?
I think I would like to disclose that I would have been short in the market open today. I feel it can come down because a place for a turn back was right. There was no sign of weakness yesterday but the place is right, just because the place is right, a very safe thing to do is to short.
I feel maybe 3,300 levels could come in and the second level may be around 3,230. So it's safer on the short side, if the trade goes against you today, then I will cover on Monday but not today.
As a trader how would you trade some of these sugar stocks and how would you use this bounce in a Balrampur, Sakthi and even something like a Bajaj Hindustan today?
Most of the sugar packs were at make or break levels around 4-5 days back, so they have actually broken down. I would really be worried about taking a long position on this, unless I find very strong supports. Bajaj Hindustan had a very strong support at Rs 315 and that is broken, so that could be again a strong resistance out there.
Sakthi Sugars may come down to Rs 105-Rs 110 levels. If I see a bounce from there, perhaps then I could buy there.
A couple of those midcaps which were bouncing for the last two days Voltas and Nitco Tiles, if you have taken a look?
Voltas had a target of Rs 1000, it went up to Rs 1020 -Rs 1030 and it still looks up. Maybe it can go up.
Nitco Tiles certainly was giving some good volumes out there in the last few days. It can go to around Rs 220 levels. Money can still be made on the long side on this stock.
Any disclosures?
I think I have disclosed it all. I must have been short on the Nifty in the morning.
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